Disha Agarwal | ICFAI Hyderabad | 26th July 2020
Toyota Jidosha Kabushiki v M/S Prius Auto Industries Ltd
Facts:
The Plaintiff (Toyota) is one of the largest corporations dealing with the manufacture and sale of automobiles. Plaintiff launched its first commercial hybrid car with the trademark ‘Prius” in Japan in the year 1997 and later on in U.K, Australia, U.S.A etc. Subsequently, Plaintiff claimed registration of its mark in various jurisdictions. The plaintiff’s registration of mark was pending in India since 2009. The contention arose when Plaintiff’s discovered that defendants M/s. PRIUS Auto Industry were trading in the name of the mark ‘PRIUS’. Defendants obtained registration of the trademark ‘PRIUS” in 2002 and have been using it since 2001. Thus, the plaintiff approached the Court seeking permanent injunction restraining the defendants from using the mark ‘PRIUS’, claiming that they have acquired trans-border reputation of the respective trademark.
Issues:
- Whether Toyota can maintain an action for passing off against the defendants on the ground of trans-border reputation as the model with the trademark ‘PRIUS’ was not available in India till 2009?
Contentions:
The plaintiffs’ contended that they have acquired trans-border reputation of trademark and actual sale of good is not essential in contending reputation/goodwill. The trademark ‘PRIUS’ through cars was widely advertised by way of circulation in leading newspapers, magazines which is sufficient for proving reputation/goodwill. The plaintiff also contended that due to the mark adopted by defendants there is likelihood of confusion with respect to the same which is detrimental to their trademark.
The defendants contended that they have gained significant reputation/goodwill over the years in the domestic market. They also stated that plaintiff has not sold a single product in India, they haven’t registered their trademark, therefore they cannot claim goodwill with respect to Prius cars in Indian market. Defendant urged the court to follow territoriality principle rather than Universality principle. Defendants also contended that the plaintiff has not adduced sufficient evidence with respect to their trans-border reputation. They also stated that it should be noted that there is delay on the part of the plaintiffs to initiate an action for passing off and thus should not be maintainable.
Single Bench’s observation:
The Learned Judge observed that it was a clear case of spill-over of reputation and passed ad-interim injunction restraining the defendants from using the respective marks in respect of auto mobiles manufactured by defendants. The Court stated that plaintiff has acquired significant reputation and goodwill through websites, newspapers, magazines etc. It also stated that the mark has attained the status of well-known mark.
Division Bench’s observation:
The Court observed that Territoriality Principle should be the primary focus for the present case and not the Universality Doctrine. They stated that, it is necessary that the trademark is recognized and has a separate existence in each sovereign Country. The Court stated that acquiring goodwill globally is not adequate what is essential is the mark should earn goodwill at the relevant time i.e. before the date of adoption of the mark by the opposite party. Positive evidence of spillover of reputation and goodwill of the plaintiff’s mark ‘Prius’ to the Indian market, prior to April, 2001, is absent, when the defendants adopted and used the trademark Prius.
The territoriality principle was followed changing the dimension of trans-border reputation in the country. Reliance was placed on the decision of “Starbucks (HK) Ltd. & Anr. v British Sky Broadcasting Group PLC & Anr”[1], wherin the Court emphasized that “goodwill of the trademark in the local territory should be established”, they further elaborated that “goodwill should be of utmost importance as one of the essential elements of the Trinity test of passing off”[2]. Following the trans-border jurisprudence of U.K and America, the Court relied on territoriality principle stating that the plaintiff must prove local goodwill in the context of trans-border reputation prior to the incorporation and registration of the defendant’s trademark.
It also emphasized that plaintiff did not adduce adequate evidence for an action of passing off. The Court also stated that the delay of 9 years by the plaintiff in filing the suit cannot be considered reasonable. Time is the essence doctrine was reiterated in order to maintain an action for passing off, accordingly it was decided in favor of Prius.
Analysis:
The present case embarks a new dimension towards the future of trans-border reputation in India. The concept of trans-border reputation in India has evolved over the years and there has been paradigmatic shift from the application of Universality principle to Territoriality principle. The decision passed by Delhi High Court is in consonance with the principles followed in U.K, America, Canada etc. The Indian Courts in the history have shown a strong trajectory towards the protection of foreign marks. This case has taken a strong stance by preventing destruction of economic fibre of the home country and subsequently, restricting dilution of this trans-border reputation. It is important for any nation to strike a balance between recognition/protection of foreign marks in compliance with international principles and protecting its country’s economic fibre from exploitation. This case has also highlighted the importance of bonafide national trader which the courts often failed to recognise. It is imperative that each case has to be decided on the basis of facts and prevailing circumstances and blanket application of the principle should be prohibited.
[1] [2015] UKSC 31
[2] Reckitt and Coleman- Trinity Test- Goodwill, Misrepresentation and Damages.
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